Pakistan finance minister to step down amid IMF bailout talks

Pakistani Finance Minister Asad Umar on Thursday said he would step down, after he held talks with Prime Minister Imran Khan, raising fresh questions on plans for averting an economic crisis amid bailout talks with the International Monetary Fund.

Speculation that Umar would leave had been rife for months, with some business groups and investors unhappy with his strategy of seeking short-term loans from allies such as China and Saudi Arabia instead of finalizing an IMF rescue package after Khan assumed power in August.

Umar has been leading negotiations with the IMF for what would be Pakistan’s 13th bailout since the late 1980s but has faced criticism over a worsening economic outlook under his watch.

The central bank last month lowered growth forecasts and raised interest rates at a time when inflation is at a five-year high. The rupee currency has also lost about 35 percent since December 2017.

“As part of a cabinet reshuffle PM desired that I take the energy minister portfolio instead of finance. However, I have obtained his consent to not take any cabinet position,” Umar said on Twitter.

Umar, the former chief executive of Engro, Pakistan’s biggest private conglomerate, said he strongly believed that Khan was the best hope for Pakistan.

Khan’s government has got temporary relief from allies including China and Saudi Arabia, who offered short-term loans worth more than $10 billion to buffer foreign currency reserves and ease pressures on the current account. But it has not been enough.

On Monday, a minister said the country had reached an “agreement in principle” with the IMF on a bailout program and expected to formally secure a rescue package later this month.

The bailout has been delayed since last year as Pakistani officials have said they worry IMF conditions could hurt economic growth.

The central bank forecasts growth at 3.5 to 4 percent in the 12 months to end-June, well short of a government target of 6.2 percent. The IMF paints a gloomier picture, predicting a growth of 2.9 percent in 2019 and 2.8 percent the following year.